On Monday, Senators Adam Schiff (D-CA) and John Curtis (R-UT) put forward a proposal that could restrict prediction market platforms Kalshi and Polymarket from permitting users to bet on sports events or engage in casino-type activities.

This bipartisan legislation would exclude FanDuel and DraftKings, which are governed by state-specific gambling regulations, rather than national ones.

“Contracts for sports prediction are essentially sports wagers — just labeled differently. Yet, these contracts are presently available in all fifty states in blatant contravention of both state and federal laws,” Schiff stated.

Gambling has gained significant traction in American society after a Supreme Court ruling in 2018 that allowed states to make sports betting legal. The total amount wagered on sports surged from $4.9 billion in 2017 to $121.1 billion in 2023. Most major professional sports leagues have partnerships with gambling firms, despite prominent athletes potentially facing incarceration for their alleged involvement in money laundering schemes.

Prediction markets such as Kalshi and Polymarket fall under the purview of the Commodity Futures Trading Commission (CFTC), which is why Schiff and Curtis are capable of addressing them through federal oversight, instead of leaving them to state-regulated sportsbooks. However, these senators contend that there’s not much difference in practice between wagering on sports through federally or state-sanctioned applications. For example, Kalshi’s Super Bowl trading volume hit over $1 billion this year — a staggering 2700% increase compared to the previous year.

“An excessive number of young individuals in Utah are being exposed to addictive sports wagering and casino gaming contracts that should be regulated at the state level, not under federal oversight,” Curtis remarked.

Curtis’ worries regarding gambling dependency are valid. Researchers at the Qualcomm Institute and School of Medicine at the University of California San Diego scrutinized online search data and discovered that when online sportsbooks became accessible, requests for assistance with gambling addiction grew by 61% and have continued to rise since.

A representative for Kalshi, Elisabeth Diana, informed TechCrunch that this legislation would hinder competition and drive users towards offshore prediction markets.

“This bill appears driven by casino interests that feel threatened by competition. Their primary concern seems to be safeguarding their monopolies instead of protecting consumers,” Diana stated.

Polymarket did not provide a response to a request for comment.

Kalshi has encountered further legal difficulties recently — the app is currently under a temporary ban in Nevada and faces criminal accusations in Arizona.